Backfire at Boeing Misadventure in High-Performance Health Care

Claudia Rideout was told in May that her gynecologist would no longer be covered by her health insurance—in part, she later learned, because her doctor had failed to give her a Pap smear.

The test is an inexpensive yet highly effective way to check for cancer of the cervix, and women should receive it regularly. Not giving the test raised a red flag for Regence Blue Shield, which had been reviewing her doctor’s insurance claims.

The health insurer had been contracted by Boeing Co. to rate the performance of thousands of doctors in the Seattle area and to include the best in a new network for employees. When Rideout, whose husband, Jay, has spent 19 years with the aerospace giant, learned that her gynecologist would not be in the network because he had not administered a Pap smear, she was alarmed, but for a different reason.

"Well," she says, "I don’t have a cervix."

Her cervix had been removed, along with her uterus, more than a decade earlier when she underwent a hysterectomy. Without a cervix, it was medically unnecessary, wasteful even, to give her a Pap test.

The mistake is an example of how Boeing’s effort last year to control medical costs and improve the quality of care for which it pays failed to win the support of employees. Boeing had hoped to change the way it pays for health care by having its health insurer rate the performance of doctors. The best would then be selected for a network to be used by Boeing’s engineers and their dependents.

But missteps along the way derailed the project, unleashing the ire of Boeing’s engineers, their doctors and the engineers’ union. The difficulties underscore the risk and complications employers face when trying to change the health care system and serve as a cautionary tale for other employers looking to hold doctors more accountable for the health care they provide.

When he received the letter from Regence Blue Shield, Dr. Michael Kelly, the Rideouts family doctor, says he was embarrassed. "I hope nobody finds out about this," he recalls thinking to himself. "The most important thing we have is our reputation."

Boeing’s desire to rate the quality of its doctors is rooted in what health care policy experts agree is a central problem driving the nation’s $2 trillion (and rising) annual health care tab. Health care represents 16 percent of GDP, and its economic burden has been linked to stagnant wages, the increase in the uninsured population and the inability of businesses to hire workers.

At the heart of the problem, health experts say, is a reimbursement system that pays doctors not for the quality of the health care they provide, but simply for the services they perform. Thus, back surgery is compensated richly, and often recommended by doctors, even though physical rehabilitation is a cheaper and often more effective treatment.

This fee-for-service system is widely faulted for driving up the health care bill without necessarily making Americans healthier. To change that, employers like Boeing, as well as insurers and state and federal governments, are trying to change the health care marketplace. These payers of health care would like to create the kind of price and quality transparency that exists in other markets, like the comparisons offered for televisions or other consumer goods. Employers want to make doctors accountable to the same market forces that inform the ways companies pay for any other good or service.

The first step in this transformation is to rate doctors according to the care they provide, not the services they charge for. Ultimately, the thinking goes, doctors will get paid for providing high-quality care, not just expensive tests for which they are well compensated. At the very least, Boeing believed, the aero¬space company would cease to pay for health care that did not meet widely accepted medical guidelines for being both medically and economically sound. But, as it turns out, rating a doctor is fraught with complexity, emotion and entrenched interests—and is nothing like rating the cost and quality of a television.

Dr. Michael Schiesser, along with Dr. Kelly, the Washington State Medical Association and four other doctors, has filed a lawsuit against Regence alleging libel--or, as Schiesser says, "for firing torpedoes of slander in my direction."

"We all agree around the concept and philosophy" of rating the performance of doctors, says Stephanie A. Johnson, Boeing’s director of policy and strategy for global benefits. "It’s the execution that creates a little bit more controversy."

Quest for quality Boeing has long felt that since it was paying for health benefits—the Chicago-based company shelled out $1.8 billon in 2005 alone for more than 130,000 U.S. employees—it should know what it was getting for its money. The world’s leading manufacturer of commercial jetliners was particularly concerned that it knew little of the quality and efficiency of its doctors, and might be paying for poor medical care but was unable to compel doctors to improve.

Boeing wanted to do something to make the best doctors easily available to its employees by measuring their performance against nationally recognized standards of care. In 2004, it asked its largest claims administrator, Portland, Oregon-based Regence Blue Shield, to pick the best ones for a new network for its engineers and their dependents—about 45,000 people in all. "We didn’t tell Regence how to do it," Johnson says. "We really do look to our health plans [to lead the way] on methodology. But one of the criteria we ask of them is that they not, to the extent possible, create a new way to do it. They should use nationally agreed-upon criteria."

Regence had already begun developing standards, so it was not a huge leap to rate nearly 7,000 of its approximately 17,000 medical providers in the Puget Sound area for Boeing. Regence used standards that have since been codified under the aegis of the Department of Health and Human Services’ Agency for Healthcare Quality and Research by groups representing doctors, consumers, employers and health plans.

"We adopted measures that are nearly universally accepted," says Dr. Jeff Robertson, Regence’s chief medical officer. The metrics, he adds, are virtually identical to those now being used by the federal government’s Centers for Medicare & Medicaid Services, other employers and unions, and employer health coalitions such as the Puget Sound Health Alliance and the New York Business Group on Health.

More unusual was Boeing’s request that the ratings be used not just to identify underperforming doctors, but to exclude them from the network as well.

"There is not a lot of appetite [among payers] to use this information to create tiered networks," Robertson says.

Knowing that rating doctors for a selective network would be controversial, Robertson says, Regence communicated the upcoming changes with medical providers through forums and through executives at large medical practices. Robertson says that in January, Regence published the results on a confidential Web site to give doctors an "opportunity to challenge their rating if they found imperfections or errors in the data."

For doctors who did not make the grade, there was little opportunity for them to improve before the network was made public.

"The network was not meant to be an improvement program," Robertson says. "It was meant to be a select network."

A month later, Dr. Michael Schiesser, an internist in Bellevue, Washington, was one of 600 doctors to receive a letter from Regence. The letter, dated February 7, 2006, described the health insurer’s efforts to create the Regence Select Network, which would be composed of "practitioners who have demonstrated high standards of quality and cost efficiency." Regence told Schiesser that his medical practice "does not meet our selection criteria at this time." Schiesser was immediately suspicious of Regence’s finding. In 2005, he says, he was awarded $5,000 for being among the top 10 percent of doctors in Regence’s network. Curious about his change in standing, Schiesser requested to see Regence’s data.

Like other doctors, Schiesser noticed several problems when he compared the data with the information in his files. Several patients who Regence said had diabetes actually did not, Schiesser says. Other people he was said to have evaluated were not his patients, he adds.

"The network was not meant to be an improvement program. It was meant to be a select network" -- Dr. Jeff Robertson, Regence's chief medical officer

Schiesser also noticed that he was penalized for not giving women Pap smears. The doctor says these women, whose names were included in the data, had undergone hysterectomies. (In the U.S., one in three women has had a hysterectomy by age 60, according to the U.S Department of Health and Human Services.) When he called Regence to complain, the health insurer invited him to help deduce whether its methodology was flawed. Schiesser declined, saying the time needed to do so would cut into his medical practice.

Dr. Michael Kelly, the Rideouts’ family doctor, tells an almost identical story. When he received the Regence letter last February, he was embarrassed.

"I hope nobody finds out about this," he recalls thinking to himself.

Process questioned Jay Rideout, a technical analyst at Boeing, spends his days poring over statistical databases and looking for problems in the jets flown by commercial pilots. When a statistical anomaly catches his eye, he says, he will "dive in and look at the logbooks" kept by pilots.

"I don’t rely on basic statistics," he says. "I use the statistical trend to engage in deeper research about the aircraft."

In May, Rideout arrived home from work to find a letter that soured his day. It was the same one that had been sent to thousands of Boeing engineers from Regence, and said that as a result of a collective bargaining agreement between the union and Boeing, the health insurer was implementing a new physician network consisting of "health care providers who deliver high-quality, efficient care." The letter said visits to Kelly’s office would no longer be covered by Boeing.

The Rideouts had known Kelly for more than a decade. The doctor had helped treat their youngest son, Craig, now 24, for neurofibromatosis, a genetic disorder that causes tumors to grow on nerves. When the Rideouts’ daughter, Janel, 26, did not have health insurance several years ago, Kelly saw her for a much-reduced rate. Kelly has also seen Jay Rideout through his share of aches and pains. The doctor helped him find a specialist for two rotator cuff surgeries and did the same for Claudia Rideout when she needed corneal transplants on both eyes.

"He’s somebody we’re very comfortable with," Jay Rideout says. "He’s seen us through a lot of stuff."

Though the news was disheartening, Jay Rideout says he would have likely found another doctor. But then another letter arrived from Regence. This one said that visits to a prior family practitioner, Dr. Matthew White, would also not be covered in the new network. Then a third letter said Claudia would have to find a new gynecologist if her insurance was to cover the cost. It seemed the family’s personal network of doctors had instantly disintegrated. To the Rideouts, the coincidence was a statistical impossibility. Jay Rideout had a long conversation with Kelly about the data Regence used, and was surprised to hear what he had to say.

"I have enough working familiarity with processes to know that getting it wrong can be really dangerous," Jay Rideout says.

Then he called his union to complain.

The Society of Professional Engineering Employees in Aerospace had initially supported the creation of a high-performance network.

"We understood doctors would get cut from the network, but we thought the emphasis would be on improving quality," says Stan Sorscher, a union representative. "You’ve got 593 doctors you’re kicking out of the network. Did you give any doctors the ability to improve?"

By late May, the union’s phones started ringing. Engineers told their union representatives that they considered Regence’s new network to be a reduction in benefits. Some 8,000 patients were told to find a new doctor. Members like Jay Rideout sided with their doctors and concluded that the health insurer had misapplied its data.

"The relationship between patient and doctor is very powerful because the stakes are high and the relationship is based on trust," Sorscher says. "If you are going to interfere in that relationship, you better have a credible reason to do it.

"Members with real experience [at looking at data and improving processes] made it abundantly clear that this process was not credible enough, not sufficient enough, to interfere with that relationship."

Lawsuit On June 8, Regence sent two separate form letters—one to engineers and one to physicians. Both letters apologized for a misunderstanding. Regence apologized for implying that doctors not included in the network do not provide quality care.

"That was neither our intent nor our perspective," the letters say. The letters also say implementation of the network would be delayed until July 2007 "due to errors discovered in communication to some members."

Both Schiesser and Kelly, whose letter was hand delivered to his office by a Regence public relations representative, refused to accept Regence’s apology. The insurer did not acknowledge what they believe to be the crux of their complaint: The data and methodology Regence used to rate doctors were flawed.

In September, the union held a rally with the doctors and the Washington State Medical Association. Shortly thereafter Schiesser and Kelly, along with four other doctors and the association, filed a defamation lawsuit against Regence. The doctors have sued Regence for libel—or, as Schiesser says, "for firing torpedoes of slander in my direction."

"The most important thing we have is our reputation," Kelly says. Boeing was not named in the suit.

The Rideouts have known Dr. Kelly for more than a decade. He helped Jay find a specialist for two rotator cuff surgeries and did the same for Claudia when she needed corneal transplants. "He's somebody we're very comfortable with," Jay Rideout says. "He's seen us through a lot of stuff."

The lawsuit accomplished its first goal in December, when Boeing’s compensation and benefits group sent an e-mail to Jay Rideout and other engineers saying Regence had decided not to implement the performance-based network. Its second goal, which is still unfulfilled, is to compel Regence to admit its data and methodology were flawed. The parties are in settlement negotiations, which could end as soon as next month, says Jennifer Hanscom, a spokeswoman for the medical association. Nonetheless, the doctors’ message has been heard by other purchasers of health care who are hoping to make provider performance information publicly available. What the doctors want is to be included in the ratings process and have a chance to respond to the results and see the data being used.

"If Regence had worked with their physician members in a way they should have, they would have averted this issue," says W. Hugh Maloney, president of the Washington State Medical Association.

The lawsuit has limited both parties from responding to specific allegations. Regence and Boeing say the data and methodology used were not flawed. "We stand by our measures," a Regence spokesman wrote in a recent e-mail, even though Regence president Mary McWilliams has said publicly that rating doctors is "not a perfect science." Robertson, the health insurer’s medical director, says he worked with physicians as the network was being rolled out. The lawsuit, he says, "came as a complete shock."

Charges that the data is imperfect are "an attempt to make the perfect be the enemy of the good," he says, an oft-heard phrase meaning that while the methodologies may be imperfect, they are good enough to be used effectively.

Johnson also says Boeing terminated the network because of "basic execution errors." Several hundred employees did not receive letters from Regence telling them that their doctor would not be included in the new network.

The company, meanwhile, will continue to move ahead with creating select networks and rating providers. Boeing plans to launch early this year a high-performance network through Aetna for employees in Texas as well as for some of its retirees.

Whether Boeing will stay with Regence is a "hard question to answer," Johnson says.

Regence stands by the data and methodology used, stating that rating doctors is "not a perfect science." --Mary McWilliams, Regence president, in a public statement

Boeing is now willing to consider a carrot approach in which high-performing doctors are rewarded financially, but the company doesn’t plan on paying more for it.

"What we don’t want is a situation where we pay what we’re paying now for the low quality and pay more for better quality," Johnson says. Other efforts around the country to rate doctors are taking that approach.

"Given the state of the art of physician measurements, [doctor’s ratings are] best used in a rewards program," says Thomas Mayer, a physician and health care consultant who worked to implement a similar program with the Hotel and Restaurant Employees International Union in Las Vegas. "It’s a program you can use to reward people because if you make a mistake and reward the wrong person, no big deal. But if you use it punitively there is the potential for error."

Another potential problem, one that Boeing recognizes, is whether consumers will ever trust the data about a doctor’s performance or whether they will continue to judge doctors based on their own experience. After all, relationships with doctors are more than mere transactions. Given his experience with his company’s select network, Jay Rideout would likely pay more money just to keep the doctor he knows.

"If I can keep my doctor and it turns out to be one of those things where we have to pay more money for it," Rideout says, "well, that’s just life."